Stimulus Grant for Calif Jobless System Questioned

SACRAMENTO, Calif. -- California has received $60 million from the federal stimulus package to upgrade its 23-year-old unemployment benefits system even though previous federal funding to improve the same system has not been fully spent.

The state handles about 13 percent of the nation's unemployment claims but processes benefits on a computer system built during the 1980s based on 1970s technology. The state should have completed an upgrade last year using federal unemployment money it received seven years ago, with the new system already in operation.

The original cash infusion was roughly the same amount as the stimulus money California received this year to upgrade its benefits system.

According to the most recent report from the state's information technology office, the project that was intended to improve the state's so-called Single Client Database will not be completed until 2014, six years behind schedule.

Despite the lag, the U.S. Department of Labor has found no fault in how California used the previous allocation because the program was designed to give states flexibility. They could use the money as they saw fit.

The federal government has no plans to sanction or fine California for not completing the original technology upgrade. The Labor Department said it was more concerned that new stimulus funding is used in a way that will allow more workers to qualify for unemployment assistance.

"We want states to use unemployment modernization funding to provide unemployment compensation to a broader group of workers," Jane Oates, the Labor Department's assistant secretary for employment and training, said in a statement.

California received $66 million in 2002 to upgrade its computer system for processing unemployment claims. The money was authorized by Congress under the Reed Act, which allowed the Labor Department to distribute $8 billion in surplus money from the Federal Unemployment Tax Account.

The intent was to bolster state unemployment trust funds and help pay state administrative costs.

California used its share of Reed Act funding on two projects. One upgrade would have better matched staffing levels with call volumes on the government's unemployment help line. The other was to improve a payment system so claimants can certify their eligibility over the phone or Internet.

As of last January, less than $12 million _ or 18 percent of the total received in 2002 _ had been spent, according to a legislative staff report. The rest remains unspent.

The failure to fully implement the upgrades projected from the 2002 funding has real-world effects on those who have lost their jobs. It is especially noticeable as California's unemployment rate has soared above 12 percent, a modern-day record.

For example, jobless Californians can file their initial application online but have to complete follow-up forms by hand, which takes the state longer to process.

Even once approved, the state does not have the capacity to make direct deposits into people's checking accounts. The state hopes to tackle that project using the latest infusion of stimulus money.

"Everything is done through mail, and I hate that," said 20-year-old Janessa Rivera, of Sacramento, who was making her second attempt this year to apply for benefits at an unemployment office in the state capital. "Only the application is online. Everything else you have to wait for a call. You have to wait for it in the mail."

In 2003, a year after the Reed Act money was distributed, the Government Accountability Office said 17 percent of the $8 billion had been spent. It has not conducted an audit since.

This year, the Obama administration's $787 billion stimulus package allocated another $60 million for California to modernize its unemployment system.

State officials plan to use $20 million to overhaul the state's unemployment database, which runs on computers that display a black screen and fit just 30 lines of text. That conversion is expected to take 1 1/2 years.

The rest could be used for future projects. Just as with the Reed Act, the state faces no deadline for spending the stimulus grant.

Dale Jablonski, deputy director of information technology at the California Employment Development Department, acknowledged the system's upgrade is long overdue but defended the work done so far. He noted that California has not experienced a major computer breakdown even as the number of unemployment claims has spiked.

The state Employment Development Department received 280,000 initial unemployment claims last month, up more than 50 percent from the same month two years ago.

"It's like rebuilding an airplane while it's in the air," said Jablonski, who helped write the code for California's unemployment benefits system in the 1980s. "It's not easy under normal volumes. It's even harder under high volumes."

SACRAMENTO, Calif. -- California has received $60 million from the federal stimulus package to upgrade its 23-year-old unemployment benefits system even though previous federal funding to improve the same system has not been fully spent.The state handles about 13 percent of...